Bombay High Court
Sanjay A Shah 14 Ors vs State Bank Of India And 2 Ors on 16 February, 2021
Bench: A.A. Sayed, Madhav Jamdar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.2297 OF 2021
...
Sanjay A. Shah & Ors. ...Petitioners
v/s.
State Bank of India & Ors. ...Respondents
....
Mr. Siddhesh Bhole a/w Mr. Yakshay Chheda i/b M/s. SSB Legal & Advisory
for the Petitioners.
Mr. R.J. Singh i/b M/s. R.J. Singh & Co. for Respondent No.1/SBI.
Mr. Mohamedali M. Chunawala i/b Mr. A.A. Ansari for Respondent No.2.
Mr. Rishabh Shah a/w Mr. Sayyam Maheshwari i/b M/s. Raval Shah & Co.
for Respondent No.4.
Advocate Mr. Umesh B. Sonkar, DRT Receiver - Respondent No.3 present
in Court.
...
CORAM : A.A. SAYED &
MADHAV JAMDAR, JJ.
DATED : 16 FEBRUARY 2021
P.C.:
1 The Writ Petition is filed seeking the following reliefs:
"a) That this Hon'ble Court be pleased to issue a Writ of
Certiorari or any other appropriate writ, direction or order
quashing the Impugned Order dated 27 October 2020 passed on
Exhibit 65 for appointment of Court Receiver to forcefully evict
and take possession of 'Amar Chambers' situated at 97, Kazi
Sayed Street, Masjid Buner Street (W), Mumbai - 400 003 8 July
2020 being arbitrary, illegal, null and void;
b) That this Hon'ble Court be pleased to issue a Writ of
Certiorari or any other appropriate Writ, direction or order
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quashing the Orders dated 2 November 2020 and 18 December
2020 passed by the Recovery Officer rejecting the Intervention
Application of the Petitioners in Recovery Proceedings No.118 of
2017 in O.A. No.3344 of 2000 being arbitrary, illegal, null and
void and allow the Petitioners to intervene in the Recovery
Proceedings No.118 of 2017;
c) That this Hon'ble Court be pleased to issue a Writ of
Prohibition or any other appropriate Writ, direction or order
against Respondent Nos.1 & 3 or their agents and/or assigns to
take any steps against the Petitioners without following the due
process of law and without giving the Petitioners sufficient
opportunity of being heard;
d) That this Hon'ble Court be pleased to pass an order and/
or direction against Respondent No.1 and 3 or their agents,
assigns to restore status quo ante as of 25 October 2020 and
further order to restore physical possession of the Petitioners of
their respective units in 'Amar Chambers' situated at 97, Kazi
Sayed Street, Masjid Bunder Street (W), Mumbai - 400 003;"
2 The Petitioners claim to be the tenants of the building known as
'Amar Chambers' situated at 97, Kazi Sayed Street, Masjid Bunder (W),
Mumbai - 400 003 comprising of basement, ground, mezzanine and five
floors (hereinafter referred to as 'the said building'). The Petitioners claim to
have been dispossessed from their respective units on 26.10.2020 by the
Respondent No.3-Umesh Balaram Sonkar, who was appointed as DRT
Receiver by the Recovery Officer for taking over possession of the said
building.
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3 The Petitioners are 3rd parties to the proceedings filed by the
Respondent No.1-SBI being OA No.3344 of 2000 before the Debt Recovery
Tribunal (DRT) under section 19 of the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 (in short 'RDDBFI Act') seeking
issuance of Recovery Certificate for the sum of Rs.16.75 crores against the
borrower one Lanyard Foods Ltd. (in liquidation) and other Defendants
therein. The borrower is the owner/landlord of the said building. The
borrower/landlord who was the Defendant No.1 in the OA had availed
financial assistance to the tune of Rs.24 crores from Respondent Nos.1-SBI
and had morgaged several properties by way of Memorandum of Deposit of
Title Deeds. The said building was one of the mortgaged properties.
4 The borrower/landlord had purchased the said building on 9
March 1999 under a Deed of Conveyance from the erstwhile
owners/landlords viz. Mahendra Maneklal Shah, Rohit Maneklal Shah and
Pravin Maneklal Shah. The Second Schedule of the Deed of Conveyance
dated 9 March 1999 sets out the list of tenants which reads thus:
"SECOND SCHEDULE
LIST OF TENANTS
Basement. Shah Dwarkadas Vallabhadas & Co. )
) Rs.10,000 p.m.
Ground floor Shah Dwarkadas Vallabhdas & Co. )
MEZZNINE FLOOR
(1) Sanjay A. Shah. 511=00
(1)A) Trupti S. Shah 511=00
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FIRST FLOOR
(1) Mahendra K. Shah 150=00
(2) Shah. Dwarkadas Vallabhdas & Co. 25=00
2nd FLOOR
(1) Rajendra Kumar & Co. 573=00
(2) Shantilal Lilahand 234=00
(3) Nutan Stores Supplying Co. 234=00
(4) Manilal Mohanlal Parekh 234=00
(5) Vinesh Bhupatlal Kamdan 234=00
3RD FLOOR
(1 &2) Mohanlal Bhagirath 1040=00
(3) Manoharlal Bhagirath 496=00
4th FLOOR
(1) Manilal Mohanlal Parekh & Co. 622=00
(2) Arvind P. Shah 234=00
(3) Ech Jay Chemicals 234=00
(4) Synthetic Dye - Chem Corporation 234=00
(5) Asanand & Sons. 234=00
5th FLOOR
Shah Dwarkadas Vallabhdas & Co. 617=00 p.m."
5 On 24 October 2016, the Debt Recovery Tribunal passed an order
and judgment allowing the OA No.3344 of 2000 and directing the
Defendants to jointly and severally pay a sum of Rs.16,75,80,547/-
alongwith interest at 16.25% p.a. The operative part of the judgment dated
24 October 2016 reads as follows:
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"O R D E R
1) The Original Application is allowed with costs.
2) The Defendants Nos.1 to 6 do pay jointly and/or severally
to the Applicant Bank a sum of Rs.16,75,80,547.17 ps. (Rupees
Sixteen Crores Seventy Five Lacs Eighty Thousand Five Hundred
Forty Seven and paise Seventeen only) with interest @ 16.25%
p.a. with quarterly rests from the date of filing of the O.A. i.e.
24.10.2000 till realization.
3) If the Defendant nos.1 to 6 fail to pay the decretal
amount with interest as above, all other legal modes available
under an Act including the sale of the mortgaged & hypothecated
movables as mentioned herein below may be adopted for
recovery of the debt due:-
Mortgaged property:
(i) ... ... ...
(ii) ... ... ...
(iii) ... ... ...
(iv) ... ... ...
(v) ... ... ...
(vi) The Land and Building with basement, ground
mezzanine and five floors and all other structures known as
"AMAR CHAMBERS" situate at Kazi Syed Street admeasuring
134 sq.yds. equal to 112-5 sq. mts. under Old No.673, New
No.6366, Old Survey No.461, New Survey No.2604, C.S. No.294,
Mandvi Division, Masjid Bunder, Mumbai 400 003. The area
occupied by the Defendant no.1 is 3775.00 sq. ft. of built up area
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and rest of the area is occupied by tenants, (as described in
Exhibit - C, page no.26 to the O.A.) and
Hypothecated Goods, Book Debts etc.
... ... ..." (emphasis supplied)
6 On 27 March 2017, the DRT issued Recovery Certificate under
section 19(20) of the RDDBFI Act in favour of Respondent No.1-SBI for a
sum of Rs.16,75,80,547.17 p. The Recovery Certificate contained the list of
assets which could be sold in case of failure to pay the adjudicated amount.
The relevant portion of the Recovery Certificate reads as under:
" ... ... ...
In case of failure to pay the aforementioned adjudicated amount
within 30 days, same shall be recovered by other legal modes
available under the Act including the sale of the mortgaged
property i.e.
i), ... ... ...
ii), ... ... ...
iii), ... ... ...
iv), ... ... ...
v) ... ... ...
vi) The Land and Building with basement, ground
mezzanine and five floors and all other structures known as
"AMAR CHAMBERS' situate at Kazi Syed Street admeasruing
134 sq. yds. equal to 112-5 sq.mts., under Old No.673, New
No.6366, Old Survey No.461, New Survey No.2604, C.S. No.294,
Mandvi Division, Masjid Bunder, Mumbai 400 003. The area
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occupied by the Defendant no.1 is 3775.00 sq.ft. of built up area
and rest of the area is occupied by tenants, and
Hypothicated Goods, Book Debts etc.
... ... ..." (emphasis supplied)
7 The said building came to be attached under a warrant of
attachment dated 31 July 2018. It is averred in the Petition that the
provisional liquidator stood discharged pursuant to order dated 06.12.2018
dismissing the Company Petition filed in this Court. On 16 January, 2020
the Recovery Officer issued proclamation of sale of all the assets under the
Recovery Certificate on "as it is, where it is basis" in public auction, without
disclosing that the said building was occupied by tenants. On 9 October
2020 the Respondent No.1-SBI filed an Application before the Recovery
Officer in the Recovery Proceedings No.118 of 2017 for the appointment of
Receiver to take physical possession of the said building. In the said
Application it was averred that the said building was "occupied by illegal
occupants" who were not allowing the intending bidder to inspect the said
building. An order came to be passed by the Recovery Officer appointing
Respondent No.3 as DRT Receiver to take physcial possession of the said
building by taking such steps and using such force including breaking open
the lock or any hurdle thereof by taking assistance of police. On 26 October
2020, the officials of Respondent No.1-SBI, Respondent No.3-DRT
Receiver alongwith police officials came to the said building and took
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physical possession of the entire building by evicting the Petitioners from
their respective units in the said building. On 29 th October, 2020, a Public
Notice was issued by the Recovery Officer that the said building will be sold
by e-auction on 11 December 2020. In November/December, 2020, some
of the Petitioners filed Interim Applications interalia seeking stay to the
execution, which came to be rejected by the Recovery Officer stating that
without Lease Deed and merely on the basis of monthly rental receipts,
electricity and telephone bills, no tenancy rights can be created in the units
in the said building. Some Interim Applications came to be rejected on the
ground that the tenancy rights were created after the disbursement of the
loan amount to the borrower/landlord. Meanwhile, the e-auction was
conduced in January, 2020, and Respondent No. 4 was declared as the
successful bidder. An Appeal being Appeal No.2 of 2020 has been filed by
some of the Petitioners against the orders of the Recovery Officer. The
learned Counsel for the Petitioners submits that no orders are being passed
by the DRT and the Appeal is pending.
8 It is not disputed before the Court that the Conveyance Deed
between erstwhile owners and the borrower/landlord was executed on 9
March 1999 and in the Second Schedule the list of tenants is set out and
the Conveyance Deed was subject to the rights of tenants in occupation of
their respective units in said building and that the Recovery Officer cannot
act beyond what is stated in the Recovery Certificate.
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9 Having heard learned Counsel for the Petitioners, learned
Counsel for the Respondent No.1-SBI, learned Counsel for Respondent
No.4-Auction Purchaser and the Respondent No.3-DRT Receiver who is
present in person, we find that the Respondent No.1-SBI's action in taking
over physical possession of the "entire" building by forcefully evicting all the
occupants of the said building is entirely illegal. The Petitioners are right in
contending that Respondent No. 1-SBI's act in taking over possession of
the entire building is founded on misrepresentation and fraud. In the order
and judgment dated 24 October 2016 of the DRT as well as in the Recovery
Certificate it is specifically mentioned that the area occupied by the
borrower/landlord is 3775 sq. ft. built-up area and the rest of the area is
occupied by tenants. The Respondent No.1-SBI could therefore at the
highest have taken over physical possession of an area of 3775 sq. ft. (built
up) of the said building and no more. This area of 3775 sq.ft (built up) has
not been identified by the Recovery Officer or the Respondent No.3 DRT
Receiver. Despite the fact that the Conveyance Deed dated 9 March 1999
between the erstwhile owners and the borrower/landlord specifically sets
out the list of tenants in the Second Schedule, the Respondent No.1-SBI
alongwith Respondent No.3-DRT Receiver with the assistance of the police
have taken over physical possession of even the units in the building
occupied by tenants who are protected under the Rent Act and who were in
occupation of their respective units even prior to the borrower/landlord
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executing the Deed of Conveyance, without any prior notice to them. It
shocks the conscience of the Court that a Bank like the Respondent No.1-
SBI has in such a high handed manner and by making false averments in
their Interim Application filed before the Recovery Officer that the said
building was "occupied by the illegal occupants" and without disclosing that
they were entitled to take possession only of 3775 sq.ft. (built up) in the said
building under the Recovery Certificate and that the Recovery Certificate
specifically stated that the rest of the area was occupied by tenants, has
taken over physical possession of the entire building including from the
occupants who were protected under the Rent Act.
10 The Petitioners had filed Applications before the Recovery Officer,
DRT-III in RP No.118 of 2017 in OA No.3344 of 2000 interalia seeking stay
of the execution of sale of the building, which curiously came to be rejected
by Recovery Officer by a cryptic order. The Recovery Officer was in error in
observing that the documents show that the Petitioners had come into
occupation after disbursement of the loan amount to the borrower/landlord
and that the Petitioners were required to approach the Civil Court and
establish their rights. There is no discussion on the documents produced by
the Petitioners. The Recovery Officer was clearly in error in concluding that
without Lease Deed and merely on the basis of monthly rental receipts,
electricity and telephone bills no tenancy rights can be created. The
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Recovery Officer failed to consider that the name of atleast some of the
Petitioners appeared in the Second Schedule of the Conveyance Deed
dated 9 March 1999 which contained the list of tenants and that the
Recovery Certificate specified the area of 3775 sq.ft. (built-up), which alone
could have been taken possession of. Some of the Petitioners preferred
Appeal No.2 of 2020 before the Presiding Officer, DRT-III against the
impugned orders of the Recovery Officer. However, no orders have been
passed in the said Appeal. It is submitted on behalf of the Petitioners that
the said Appeal is being simplicitor adjourned despite pointing out the
urgency.
11. The said building, as indicated earlier, came to be auctioned and
one Mr. Abdul Rahman Ibrahim Motiwal a (who has been impleaded as
party Respondent No.4 by way of amendment) emerged as the highest
bidder and his bid of Rs.6 crores was accepted by the Respondent No.1-
SBI. The said Auction Purchaser has deposited a sum of 25% of the
purchase price with the Respondent No.1-SBI. Learned Counsel for the
Respondent No.4- Auction Purchaser, on instructions, has however stated
before the Court that the Auction Purchaser is no more interested in
purchasing the said building. We are informed that the issue of forfeiture of
the 25% purchase price by the Respondent No.1-SBI is now pending before
the DRT. We make it clear here itself that those proceedings before the
DRT may be decided on its own merits.
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12 Ordinarily, we would not have entertained the Writ Petition
particularly when the Appeal is pending before the DRT. However,
considering the gross facts of the case where tenants who are protected
under the Rent Act have been fraudulently and high-handedly removed
from their respective units in the said building by a bank like SBI which is a
Nationalised Bank, without notice to them and by making false statements
in their Application before the Recovery Officer that the said building was
occupied by illegal occupants and without disclosing that they were entitled
to take possession only of an area of 3775 sq.ft. (built up) as stated in the
Recovery Certificate, we are unable to turn a blind eye and allow the
illegality on part of the Respondent No.1-SBI to perpetuate. We are of the
view that the DRT ought to have realised the seriousness of the matter
that tenants who are protected under the law have been overnight thrown
out of their respective units in such a high handed manner by the
Respondent No.1-SBI. The DRT has granted adjournments in the Appeal
without considering the urgency and injustice metted out and hardships
being faced by the tenants for no fault of theirs. Having regard to the gross
facts and fraud as indicated above, we do feel that intervention of this Court
is warranted by exercising our extra-ordinary writ jurisdiction. Hence, we
pass the following order:
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ORDER
i) The Respondent No.3-DRT Receiver shall in the first instance identify the 3775 sq.ft. (built up) area in the said building as mentioned in the Recovery Certificate;
ii) If the Respondent No.3-DRT Receiver is able to identify the said area of 3775 sq.ft., only such area of 3775 st. ft. shall remain sealed. The possession of the balance area in the said building shall be restored/handed over to the Petitioners from whom the Respondent No.3- DRT Receiver has taken over possession subject to their filing an Undertaking as directed hereunder.
iii) If the Respondent No.3-DRT Receiver is unable to identify the said area of 3375 sq.ft., the Respondent No.3-DRT Receiver shall restore/handover possession of the units in the said building to all the Petitioners from whom the Respondent No.3-DRT Receiver had taken over possession subject to their filing an Undertaking as directed hereunder;
iv) The above exercise shall be completed within one week from the date this order is uploaded;
v) The said Petitioners shall continue to be in possession of their respective units as agents of Respondent No.3-DRT Receiver, unless the Recovery Officer otherwise orders;
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vi) The Petitioners whose possession is to be restored shall file an Undertaking before the Recovery Officer that they shall occupy their respective units as agents of Respondent No.3-DRT Receiver and shall handover vacant possession of their units if so ordered by the Recovery Officer;
vii) The impugned orders dated 2nd November, 2020 and 18th December, 2020 of the Recovery Officer are set aside and the matter is remanded to the Recovery Officer for de novo hearing of the Applications of the Petitioners. The Petitioners would be at liberty to file fresh Applications before the Recovery Officer. The Recovery Officer shall pass fresh orders on merits in the Applications after considering all the documents relied upon by the Petitioners including the Conveyance Deed and the Recovery Certificate;
viii) The Respondent No. 3-DRT Receiver shall continue as Receiver appointed of the said Building subject to further orders that may be passed by the Recovery Officer. The Recovery Officer shall pass appropriate orders as regards the fees of the Respondent No.3-DRT Receiver. The Petitioners shall in the first instance pay a sum of Rs.50,000/- to the Respondent No.3-DRT Receiver before being restored possession. The Petitioners would be at liberty to apply to the Recovery Officer for the discharge of the Respondent No.3-DRT Receiver. K 14/15 ::: Uploaded on - 22/02/2021 ::: Downloaded on - 28/08/2021 09:50:05 ::: k 15/15 23 wpl 2297.21 os.doc
ix) We make it clear that the Recovery Officer shall be free to pass orders as he deems fit and appropriate.
x) The statement of learned Counsel for the Petitioners is recorded that the Petitioners shall withdraw the Appeal No. 2 of 2020.
xi) We further make it clear that we have not gone into the claim of the Petitioners that 'each' of them is a tenant. 13 The Petition is allowed in the aforesaid terms.
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